Exam 25: Agency Relationships

An agent is empowered to perform legal acts that are binding on the principal.

Fact Pattern 25-2 Berry indicates that she is acting as an agent on behalf of an unidentified client-Cuisine Catering, LLC-when she enters into a contract with Dean. Refer to Fact Pattern 25-2. In most states, liability to Dean for nonperformance of the contract may be imposed on

The agent must maintain separate accounts for the principal's funds and for the agent's personal funds, but may intermingle these accounts.

The duties that an agent owes a principal must be set forth in the express agency agreement.

Emmett, an agent for Fridley, signs an agreement with Grover on Fridley's behalf but neglects to tell Fridley that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. Fridley is

Ben manages a warehouse and its inventory for Coffee Shops, Inc. To operate this part of the business, Ben's authority can be inferred

Hot Dog Vendors Inc. grants its agent Iona an exclusive territory in which to sell Hot Dog products. The company cannot compete with Iona in that territory under the duty of

Bread Company hires Craig to sell the company's products in a certain area. Bread agrees to pay Craig a salary, plus commission, for a trial period. They also agree that he can sell using any methods and during any hours that seem appropriate. The key factor in whether Craig is Bread's employee is

Luis hires Mieko to act as his agent to purchase Ngoc's Southeast Asian Café. Luis tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Ngoc's seller who that third party is. Luis is

A principal may be liable for an agent's or an employee's torts.

In an agency relationship, one party called the principal agrees to represent or act for another called the agent .

Fact Pattern 25-1 Nina and Orin work at Pumps & Pipes Inc. (P&P). Nina is a sales representative who works with P&P's customers. The company closely supervises all of its sales reps, and dictates their schedules. Orin works in P&P's engineering department, but does not deal with third parties. Refer to Fact Pattern 25-1. With respect to third parties, Orin is P&P's

Agency relationships do not commonly exist between employers and employees.

Once the principal hires the agent, the principal has a duty to ignore the agent and let the agent deal with problems alone.

Ray is a delivery driver for Sicilian Pasta Company. The company tells Ray when to work, how to address customers, what he can wear when at work, and what routes to take (via an app on his phone). Ray is

High Plains Sales Inc. hires Inez to work Monday through Friday from 8 am - 5 pm on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to High Plains, Inez is most likely

An agent is not empowered to bind the principal in a contract with a third person.

Yoshi hires Zach to buy certain equipment for Yoshi's restaurant. Yoshi asks Zach not to reveal her identity or even that she is the purchaser. Zach makes a deal with Burcet, the owner of the equipment, and makes a down payment. Yoshi fails to pay the rest of the price, and does not pay Zach for his services. Does Burcet have any recourse against Zach or Yoshi? Does Zach have any recourse against Yoshi? If so, on what basis and to what extent?

Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has

When an agent, acting within the scope of his or her authority, contracts with a third party, in no circumstance is the agent liable to the third party.